Stocks roar back on news of global response to credit crisis
Stocks roar back on news of global response to credit crisis
Vietnam’s major stock market in Ho Chi Minh City made a strong rally Friday after a three-day slump as news of global action to resolve the credit crisis calmed local sentiment.
The VN-Index, the gauge of 160 leading firms and four closed-end funds listed on the Ho Chi Minh Stock Exchange, regained 19.79 points, or 4.72 percent, to close at 439.07. Despite Friday’s gain, the exchange finished the week 7.8 percent lower.
Trading volume reached 23.4 million shares Friday, double the previous day. All but one member of the benchmark index moved up, with 159 rising by the daily maximum limit of 5 percent.
Saigon Thuong Tin Commercial Joint Stock Bank, known as Sacombank and the only bank listed on the Ho Chi Minh Stock Exchange, rose VND1,100, or 4.8 percent, Friday to close at VND24,200. The only brokerage listed on the exchange, Saigon Securities Inc., known as SSI, gained VND2,500, or 4.9 percent, to close at VND54,000.
Global markets were sent into a tailspin this week when the US government allowed Wall Street titan Lehman Brothers to collapse and then rescued US investment bank Merrill Lynch and insurance giant AIG from a similar fate. In the UK, British bank HBOS was rescued on Thursday by peer Lloyds TSB in a multi-billion dollar takeover.
To limit the scope of the fallout, central banks worldwide pumped hundreds of billions of dollars into the unsettled money markets. The European Central Bank and Bank of England Friday each lent an additional US$40 billion to financial institutions struggling to obtain funds amid a worldwide squeeze on credit.
Global stocks were boosted Friday by news the British and New York state authorities temporarily banned short-selling – when a dealer sells a borrowed stock to profit from an anticipated price drop.
The US Treasury Department also announced it would use $50 billion to back money market mutual funds whose asset values fell below $1 a share. Separately, the US Federal Reserve said it would lend even more money directly to financial institutions so they could purchase certain assets from money market funds.
“The financial turmoil in the US affects investor sentiment here rather than fundamentals due to the fact that Vietnam’s financial market has been traditionally decoupled from global markets,” Bloomberg quoted Nguyen Xuan Minh, chief executive of HCMC-based Vietnam Asset Management Ltd. as saying. “Foreign fund outflows so far have been very limited.”
Minh also said another reason for the market downtrend in the last few days was retail investors taking profits after a recent strong recovery.
“In a panic situation like this, the retail investors tend to dump everything, both good and bad stocks,” Minh said. “It is a great opportunity for value investors to pick up the good and cheap stocks. There may be some indirect links that could affect the economy in the longer term, especially on exports and foreign direct investment with the global credit crunch.’’
FPT Securities Company’s broker Nguyen Hai Son, however, said the market’s strong rally could carry high risks of future losses, warning investors should exercise caution in the next few days. “I expect the market will remain positive next Monday but make corrections in the following days,” Son said.
Foreign investors were net sellers, with the net value of trades by foreign investors surpassing VND77 billion.
The Hanoi exchange also ended Friday in the black, with the HASTC-Index adding 9.66 points, or 7.1 percent, to close at 145.74.
Thanhnien
